Professional Indemnity and The Six-Year Itch – how it could cost you!

We all know about the seven-year itch but do you know about the business world’s six-year itch? It’s to do with liability – and if you’re not insured, it could cost you a pretty penny. Professional Indemnity Insurance (PI), or Professional Liability Insurance, as it is also known, is an insurance most business owners that advise or design should consider taking out.


It provides cover if a claim is made by a client who has lost money because you provided:

  • Wrong or negligent advice
  • or services including Inadequate designs (mistakes in designs, plans or calculations).

Professional Indemnity Insurance provides cover when public and products liability would not.

Some professions are required by law to have this insurance, by their professional bodies or regulators including solicitors, accountants, architects, chartered surveyors, financial advisers and some healthcare professionals.

But others are not, although some clients will insist on you having it.

If you aren’t insured and a claim is made, the impact of a claim could severely damage your business financially and even worse perhaps – in terms of reputation and trust. With insurance in place, you don’t need to retain any funds ‘just in case’ you have a claim.

It is important to note that this type of insurance will only cover you whilst it is in place. This means that if a claim is made during the period of the now expired policy, you will not be covered. It is a policy that needs to be in place continuously (albeit with different insurers) and with the first date of continuous cover noted as the ‘Retroactive Date’. You will only be covered whilst you have an active policy in place and for the period of continuous cover.


Professional Indemnity Insurance covers:

  • Legal costs and Expenses incurred defending a claim.
  • Compensation to the claimant if you are found to be responsible.

And this is where the six-year itch comes in…claims can be made up to six years after you retire, close a business, change professions, or have any dealings with clients.

Even if you gave free advice, this can still be used in a claim.

And so if you do have cover whilst the business is active, you can also obtain a run-on policy for up to the six years – because claims made during the lifetime of the policy you had when you were in business will not be covered.

Run-on cover can be provided from your existing insurer, or another one – we would search the market to find you the best policy.


Tips for choosing the right policy:

  • Check what’s covered
  • Check the excess – can you afford to pay it if you need to?
  • Does it cover what you need it to?

We specialise in finding the best policy for you, to meet your needs and ensure that should you have a claim, you are sufficiently insured.

Please get in touch for a no-obligation conversation to find out more about taking out insurance, renewing your insurance or checking you have the right cover in place.

01233 512548
If you prefer, we can call you – just register your details on our contact form and we will call you back.